Iowa House, Senate tax debate heats up
With just weeks to go in the legislative session, the Iowa House and Senate are advancing competing tax relief proposals, a difference that could complicate plans for adjournment this year.
SF576, which passed the Senate 46-0, phases in the elimination of the inheritance tax. The state’s nonpartisan Legislative Services Agency predicts the repeal would reduce revenue by nearly $18 million in FY2022. The legislation would apply to deaths occurring on or after Jan. 1, 2021.
The bill also would remove “triggers” put in place in order for broad state income tax cuts passed in 2018 to go into effect. Those triggers ensure the state’s tax collections rise enough to offset tax cuts.
If the triggers are removed, the LSA predicts the tax cuts would reduce income tax liability by roughly $297 million in FY2023.
The House also has a bill eliminating the inheritance tax, HF841. It’s unclear at this point what a final tax package will look like before lawmakers adjourn for the year in the coming weeks. House Speaker Pat Grassley has made public statements that the House will take a cautious approach to removing the triggers.
Lawmakers are beginning to introduce and advance spending bills for FY22, a sure sign that lawmakers are looking ahead to the end of the session.
The 2021 legislative session’s 110th day is April 30, a tentative adjournment date. Legislative leaders can adjourn before or after that date if they complete their business for the year. This week, the Senate unanimously approved HF 848 which sets up policy to incentivize private industry to deploy high-speed broadband infrastructure across the state. The bill now heads to the governor because the House already approved the legislation last week.
Gov. Kim Reynolds has proposed spending $150 million next year for broadband expansion, while House Speaker Pat Grassley has suggested a more modest $100 million effort.
Expanding broadband access to the state has been a key economic development goal, particularly as more work has shifted online during the pandemic. Making sure rural residents have access to high-speed internet is key to retaining educated Iowans and high-tech businesses, proponents say.
Insured drivers will enjoy protections under new law
Iowa auto owners will have new insurance protections under SF230, signed Friday by Gov. Kim Reynolds.
At 50%, Iowa has the lowest damage thresholds for what are known as “salvage titles,” issued when an insurance company paying a claim deems the vehicle a total loss. The 50% threshold can result in situations where more cars are totaled when they could be repaired. In some instances, it has resulted in insured motorists owing more on their vehicle than it is worth.
SF230 raises Iowa’s damage threshold to 70%, putting Iowa on par with surrounding states that all have thresholds of 70% or higher. The law goes into effect July 1.